The four main engine plants downstream of the military core and Avic Electromechanical Systems Co.Ltd(002013) , China Avionics Systems Co.Ltd(600372) have disclosed the 2021 annual report, showing several industry characteristics. 1) Balanced production was further consolidated and deepened. The quarterly income proportion shows that the characteristics of the high proportion of the industry’s income in the past four quarters have been weakened to varying degrees. The overall production and delivery rhythm is further close to “2323”. From quarterly balance to monthly balance, it will play a better expected guiding role in the whole industrial chain. 2) The amount of related party transactions increased. As a good prediction index for orders and performance, the amount of related party transactions in the aviation industry is expected to increase in varying degrees in 2022, which verifies the prosperity of the industry. 3) Contract liabilities increased Avic Shenyang Aircraft Company Limited(600760) and Jiangxi Hongdu Aviation Industry Co.Ltd(600316) both obtained large amount of contract liabilities in 2021q2, Avic Xi’An Aircraft Industry Group Company Ltd(000768) and Avicopter Plc(600038) the maximum deposit amount of affiliated companies is expected to increase significantly in 2022, indicating that there may be large amount of orders and contract liabilities in 2022. 4) Increase R & D investment. The R & D investment of the four main engine plants and Avic Electromechanical Systems Co.Ltd(002013) , China Avionics Systems Co.Ltd(600372) will be increased in 2021 Avic Shenyang Aircraft Company Limited(600760) in 2021, the R & D expenditure increased from 290 million yuan to 660 million yuan, with an increase rate of 130% The R & D expense rates of China Avionics Systems Co.Ltd(600372) and Avic Shenyang Aircraft Company Limited(600760) in 2021 increased by 1% and 0.9% respectively. 5) Net profit after deduction increased significantly Avic Shenyang Aircraft Company Limited(600760) and Avic Xi’An Aircraft Industry Group Company Ltd(000768) deducted non net profit increased by 70% and 53% respectively Avic Shenyang Aircraft Company Limited(600760) and Avicopter Plc(600038) deducted non net profit margins were 4.7% and 4.2% respectively, and Avic Shenyang Aircraft Company Limited(600760) deducted non net profit margin increased by 1.2 percentage points in 2021.
The boom expansion of the industrial chain is conducted in an orderly manner, and the value of sector stabilization and allocation is highlighted. Under the influence of market sentiment and other factors, the military industry sector experienced a sharp correction at the beginning of the year, and the logic of long-term boom expansion remained unchanged. The verification of advances received by downstream enterprises and the landing of large orders will be conducted in an orderly manner to the upstream and midstream along the industrial chain. During the “14th five year plan” period, the demand of supporting enterprises is large-scale and uncertain, and the performance of private leaders will be more flexible. The CSI military industry index is valued at 58 times, which is at the 16% quantile value of historical PE. It continues to be optimistic about the value of sector allocation under the current position.
Grasp the main line of aviation equipment investment, and military electronics has high independent and controllable growth. 1) The contract liabilities of the main engine factory + the verification of the advance payment, and the growth of the aviation industry chain will continue to be realized. The performance transmission is effective. From the main engine plant and engine system, to the body system and parts, and then to the upstream raw material sector, the whole industry chain has strong momentum and certainty. The main engine manufacturer pays attention to Avic Shenyang Aircraft Company Limited(600760) , Avic Xi’An Aircraft Industry Group Company Ltd(000768) , Jiangxi Hongdu Aviation Industry Co.Ltd(600316) , Avicopter Plc(600038) , Aecc Aviation Power Co Ltd(600893) ; The body system pays attention to Avic Electromechanical Systems Co.Ltd(002013) , China Avionics Systems Co.Ltd(600372) , Aecc Aero-Engine Control Co.Ltd(000738) , Beijing Beimo High-Tech Frictional Material Co.Ltd(002985) ; Attention to aviation forgings and parts Avic Heavy Machinery Co.Ltd(600765) , Wuxi Paike New Materials Technology Co.Ltd(605123) , Guizhou Aviation Technical Development Co.Ltd(688239) , Xi’An Triangle Defense Co.Ltd(300775) , Chengdu Ald Aviation Manufacturing Corporation(300696) ; Attention to metal materials Fushun Special Steel Co.Ltd(600399) , Western Superconducting Technologies Co.Ltd(688122) , Baoji Titanium Industry Co.Ltd(600456) , Gaona Aero Material Co.Ltd(300034) , Jiangsu Toland Alloy Co.Ltd(300855) ; Composite materials focus on Avic Aviation High-Technology Co.Ltd(600862) , Weihai Guangwei Composites Co.Ltd(300699) , Sinofibers Technology Co.Ltd(300777) . 2) The certainty of missile weapons and equipment benefits from practical military training, and the independent and controllable military electronics in the field of high-end equipment brings high growth. Pay attention to Beijing Yuanliu Hongyuan Electronic Technology Co.Ltd(603267) , China Zhenhua (Group) Science & Technology Co.Ltd(000733) , Avic Jonhon Optronic Technology Co.Ltd(002179) , Guizhou Space Appliance Co.Ltd(002025) , Chengdu Rml Technology Co.Ltd(301050) , etc.
Risk tip: the epidemic repeatedly affects the macroeconomic environment; Equipment R & D progress and procurement progress are less than expected; Military procurement prices fell; Industry competition intensifies.
